question_answer

Distinguish between revenue expenditure and capital expenditure in government Budget. Give an example of each.

Answer:

Capital expenditure: An expenditure which results in the creation of assets or reduction in liabilities is treated as Capital expenditure, such as expenditure incurred on construction of buildings, roads, bridges, etc.

Revenue expenditure: An expenditure which does not result in creation of assets or reduction in liabilities, is called revenue expenditure such as payments of salaries, pensions, etc.